“Unprecedented customer engagement.”  That’s what Gilt Groupe’s head of CRM said his company aims for in a recent talk at CRMC 2012.  And it’s probably what most companies aspire to achieve with their CRM efforts. With big data, new technologies and omni-channel consumer connections, the promises of customer engagement and higher sales seem to be closer at hand.  But how have CRM strategies changed to take advantage of data and new technologies in 2012? Are we seeing a CRM 2.0?

Continued Segmentation

CRM strategies just haven’t changed that much in the past few years. In fact, at least two major retailers (Walgreen’s and Sports Authority) recently presented on the launch of new loyalty programs, and various companies lauded their use of innovative CRM strategies.  But nearly all of these programs suggest a continuation down the path of CRM 1.0: traditional customer segmentation with weekly outreach through email blasts.  And though retailers may yield modest gains in sales from incremental improvements to their customer segmentation, game-changing innovations are few and far between.

Take GNC for example: the company has seen remarkable growth in recent years driven by improvements across merchandising and marketing..  Yet as Dave Sims, VP of CRM at GNC, mentioned recently in a talk about segmentation, GNC frequently gets consumer marketing wrong because of confusion about just what segment is right for an individual consumer.  Is the mid-30s professional woman who enjoys a protein bar after yoga a hardcore “body builder” just because she purchased a box of protein bars on a single trip to GNC?  What are her shopping habits really like and how can GNC lure her back for the right products at the right time? In an age where customer data is overwhelmingly abundant, retailers like GNC could be targeting individual consumers with highly personalized marketing, rather than archetypes that only loosely fit most customers?

True Personalization Isn’t Easy

puzzleRetailers want to get individual targeting right because they know that relevancy is the key to connecting to consumers and driving conversion.  But it’s not that easy. Retail CRM systems are usually dependent on transaction data gleaned only from within the retailer’s ecosystem (in-store or online), and it can be difficult to get a broader view of what consumers want or need in their lives.  For example, GNC can’t see how or where that mid-30s professional woman spends her time and money when she is not at GNC.  Even Gilt Groupe, which tracks consumers’ clicks on emails and the gilt.com website, can only guess at which of the 2500+ iterations of the daily email fits her.  And Gilt is following her every move across the various Gilt Web properties, as well as her click patterns on e-mails and purchases.  So while Gilt (and Amazon, for that matter, as well as various other online-only retailers) can provide a very good experience that is customized to consumers’ interactions within their walls, they can’t begin to provide the kind of seamless shopping experience that they hope to—until they get more perspective on each individual consumer.

CRM 2.0 – We’re Almost There

At edō, we believe that the future of CRM—and marketing in general—is true 1:1 marketing designed to specifically target individual consumers with the most relevant information for them. Thus, a shift from viewing customer as ‘typologies or archetypes’ to building relationships with individual customers. CRM 2.0 is about giving retailers the scale to reach millions of consumers, the targeting necessary to send the right message to the right consumer at the right time, and the measurement to ensure that we’re getting it right.  We partner with over 140 banks and can target based on consumer transaction dat.  Offers are distributed directly through the banks’ network (email, SMS, mobile apps), personalized and loaded directly on consumers’ cards (no coupons, no codes), we give retailers a frictionless means of attracting consumers into their stores. Offers are extremely targeted because they are based off the data that gives the best window into a shopper’s habits and preferences – purchase history.

“Unprecedented customer engagement” starts with sending precisely the right message to precisely the right customer at the time that is right for that customer.  Segmentation alone won’t get you there.  But real 1:1 marketing will.

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Bryan Frank, Director of Business Development

Bryan Frank is Director, Business Development at edō. He has held leadership roles at Li & Fung, Sears Holdings, and The Sterling & Francine Clark Art Institute, a leading art museum and research center in the Berkshires, and has consulted for retailers on digital marketing and e-commerce strategies. Frank earned an MBA from The University of Chicago Booth School of Business. He lives in New York City. Find him on LinkedIn.

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